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Financial Influencers At Risk Of Jail Time For Providing Financial Advice

Influencers need a licence to give advice says The Australian Securities and Investments Commission (ASIC).

Financial Influencers (yes, they are a thing) are at risk of jail time if they do not have a licence to give advice, says the Australian Securities and Investments Commission (ASIC).  

Young people follow a variety of influencers, from fashion to food and finance. A 2021 survey suggested that 33% of 18 to 21-year-olds. In fact, follow financial influencers, with 64% of them changing their financial behaviour based on the information they received.   

ASIC commissioner Cathie Armour said it was crucial that "influencers who discuss financial products and services online comply with the financial services laws. If they don't, they risk substantial penalties and put investors at risk".  

The Guardian spoke to a 27-year-old financial influencer Aleks Nikolic, who posts on Instagram, TikTok and Twitter, welcomed the clarity from ASIC, saying, "I think it's some of their clearest and best comms they've ever put out, potentially ever,".   

She said financial influencers were often not lawyers and more akin to consumers than the institutions such as banks and brokers that traditionally give advice.  

"I think they've really taken on a lot of comment, that certainly I've made in the past, that it was confusing and the target market was sophisticated companies with legal teams that could craft policies," she said.  

"Obviously, everyone will now madly scramble to become compliant, but that was the point."  

Nikolic, who does not hold an Australian financial services licence, said she would be reviewing her content to see if it needed to be changed.  

"I'm just glad they have been as prescriptive as they have been because they've put down some really clear guidelines for financial content producers," she said.  

"I think we've already seen action by ASIC against promoters that have pretty blatant consumer harm. We've seen crypto schemes, pump and dump schemes, people who have been building portfolios for people without having an Australian financial services licence."